The Importance of Customer Retention to Your Business | Top 5 Benefits

In 2017, finding a customer, holding their attention, and retaining them long term has become increasingly complicated. Now that consumers have so many options, for companies to keep their customers around they need to be constantly adapting to meet their needs. The importance of customer retention has never been more apparent.

While there is a sea ofcustomer retention techniques to be found online, we wanted to focus on the importance of customer retention. Why is it so necessary? Who stands to benefit? Is it worth it in the long run? All of these are questions business owners ask themselves all the time.

In this article we are going to explore the answers to these questions and more. If you have never considered how important customer retention is before now, prepare to have your eyes opened.

Why is customer retention necessary?

For the average person in business, a large part of their job is acquiring new clients. A large amount of time and energy is dedicated to this pursuit. After all, it makes sense to want more clients and customers than you already have, right?

What a lot of these people don’t understand, however, is how expensive recruiting new customers can be. On average, securing a new customer is 7x as expensive as keeping an existing customer. 7 times as expensive!

Obviously customer acquisition is important, but unless you are focusing on all aspects of their customer journey, you are going to have a revolving door business model. This leads to our next common question.

Who stands to benefit from customer retention?

As we mentioned earlier, it is far more expensive to find a new customer than retain an existing one. However, this doesn’t really answer the core question being asked: who stands to benefit from customer retention? While cutting down costs is always good, it isn’t always a good enough reason to shift focus completely to a retention based model.

For one, your customers stand to benefit enormously from a retention based agenda. This at the heart of the importance of customer retention: the customer. It seems obvious, but you would be surprised how little time and money is spent in this area.

In a recent Retention Science study,70% of marketers said that their Retention Marketing is average at best, with room for significant improvement. This means that right now your customers are likely not receiving the attention they deserve. Who stands to benefit? Your customers, and by extension, you.

Is it worth it in the long run?

While customers in this day and age are becoming less loyal to brands, it is still vital to put effort into your customer retention marketing. The importance of customer retention is not found in keeping around an extra customer or two, but in treating your customers the way they should be treated.

Another great thing about the time we live in is that people are vocal in their support. Treat a few customers right and they might bring 5 of their friends back to sign up. However, this is again why treating your customers right is so important. Customers might tell a few of their friends about you if you treat them well, but if you don’t, the whole world will know about it.

This is the double edged sword of new tools like social media and online reviews. It is up to you to do something about it and start your customer retention campaign as soon as possible. Will it be worth it in the long run? Let’s put it this way: there may not be a long run for your business unless you get started soon.

Importance of customer retention

Now that we have look at a few frequently asked questions about customer retention, let’s take a look at the benefits associated with doing it well.

Identify referral sales opportunities

As we mentioned, happy customers are likely to tell their friends about your company. Make it easy for them to give you a referral by implementing a system that rewards them for doing so. Once you receive these leads, explore them further and see if you can earn some new customers.

Foster a constructive relationship with customers

Your customers are humans too and all humans want to be treated with respect. This is where we see the importance of customer retention. The relationships you build with your customers will define how your company moves forward. It’s up to you to make sure that is a constructive direction.

Rectify flaws with company policies and procedures

Loyal customers are your best sounding board for making your companies policies and procedures better. Unlike an unhappy customer, who might vent their frustrations online in a negative way, loyal customers will tell you about the flaws in your company in hopes to make it better for their own use. Listen to them when they come to you. If you are doing it right, they want you to succeed as much as you do and they’ll tell you how they think you can do that.

Enhance brand reputation

Companies with the best customer service and retention strategies also have very strong brand reputations. This makes sense, if you think about it. These companies are turning their customers into brand evangelizers simply by treating them right, the first time. The best way to enhance your brand reputation is by focusing on customer retention, plain and simple.

Understand future needs of customers

One of the best ways to understand future needs of customers is by working with them on keeping them around. For every one complaint a customer has that they speak about, 10 others will have but never tell you. Listen to your customers when they bring things to you and it will help you understand your future customers.

Along with simply listening to the, you can also trackuser engagement metrics to monitor trends. By following these fashions, you can see how your customers are thinking and where they want to go. Your job is to help them get there.

Related

1 Comment

[…] This shouldn’t be news, but as more and more businesses adapt to the new way customers think, changes need to be made. Customers no longer have the same reasons for staying loyal to a brand or company. With other options available at the touch of the button, companies are starting to see higher churn rates and less customer retention. […]